Peel Hunt swings to profit as London IPO market "gradually" restarts

Peel Hunt reported growth in half-year revenue on Friday, highlighting an "improved performance across all business areas" and noting that IPO activity "appears to be gradually resuming" on both the London Main Market and AIM.

Peel Hunt swings to profit as London IPO market "gradually" restarts

The London-based firm, which offers investment banking, advisory, capital markets services, as well as research, distribution, and a trading platform, posted a half-year pretax profit of £1.2 million, a significant turnaround from the loss of £773,000 reported in the previous year. For the six months ending September 30, revenue rose 26% to £53.8 million, up from £42.7 million a year earlier, driven by a strong performance in its investment banking division. Revenue from investment banking grew by 31% to £22.6 million, up from £17.3 million, largely due to a 43% increase in fee generation, which reached £18.4 million, compared to £12.9 million in the prior year. Peel Hunt noted, "We saw improved performance in our core equity capital markets business, particularly in the first quarter of FY25, where we acted as joint global coordinator on a main market IPO and as nominated adviser and sole bookrunner on an AIM IPO," referring to the IPOs of Raspberry Pi Holdings PLC and AOTI Inc.

Research & Distribution division saw a 30% year-on-year increase in revenue

The Research & Distribution division saw a 30% year-on-year increase in revenue, rising to £13.6 million from £10.5 million, despite continued outflows from UK equities. Execution Services revenue also grew by 19%, reaching £17.6 million, up from £14.8 million, as the firm experienced higher trading volumes during the first four months of the financial year. However, Peel Hunt noted that weaker trading volumes toward the end of the first half were driven by concerns surrounding the US election and the UK autumn statement, particularly fears that inheritance tax relief on AIM-listed companies might be removed by a new Labour government. Ultimately, UK Chancellor Rachel Reeves confirmed that 50% inheritance tax relief would still apply to AIM-listed shares, maintaining an effective tax rate of 20%.

Future outlook

Looking ahead, Peel Hunt stated that trading in the early weeks of its second half has aligned with management expectations. However, the company cautioned that uncertainty could persist in the short term, with some of its "solid pipeline of corporate transactions" expected to be executed in the next financial year. Chief Executive Stephen Fine commented, "We were able to capitalize on improving market conditions in the first few months of FY25, most notably executing two IPOs, generating material M&A fees, and increasing trading revenues. However, the recovery slowed over the summer, and investor sentiment weakened in the final weeks of the period due to concerns about the UK budget, particularly regarding AIM." Fine also welcomed recent policy initiatives, including pension reforms and HM Treasury's call for evidence to support a growth and competitiveness strategy for UK financial services, which are intended to boost investment and liquidity in UK risk assets.